UPDATE 1-Thai True Corp slides, may lose out in 3G auction

* True shares hit three-week low on prospect of failed 3G bid

* Jasmine and Loxley down: they not joining the auction (Adds details, other telecom firms)

BANGKOK Aug 31 (Reuters) - Shares in Thailand's True Corporation Pcl TRUE.BK tumbled as much as 25 percent on Tuesday on concerns that it may lose out to its two bigger rivals in an auction for third-generation mobile phone licences.

At 0413 GMT, the stock was down 15.07 percent at 6.20 baht while the main Thai index .SETI was down 0.34 percent. At one point True had hit 5.50 baht, the lowest in three weeks.

True Corp, which owns the country's third-largest mobile phone firm, True Move, is among telecom operators seeking a 3G licence in the auction on Sept. 20-28, a crucial step in reforming the $4.7 billion sector. [ID:nSGE67T0DO]

Just two licences will be up for grabs in the first round. A third licence will be auctioned in a second round within 90 days and that is likely to cost more, especially if foreign competitors join in the bidding.

The other two firms are units of mobile market leader Advanced Info Service Pcl ADVA.BK and second-ranked Total Access Communication Pcl DTAC.BK (TACC.SI).

Thanachart Securities said in a research note it was positive on the telecommunications sector as the 3G licences would help reduce operating costs. "We expect the three big mobile operators to get 3G licences eventually," the broker said.

"However, we rate True a 'sell' as the stock could feel the dilution effect from any fund-raising plan and it might not win in the first round of the 3G auction due to its weak balance sheet," it said.

Investors also dumped shares in Jasmine International Pcl JASM.BK and Loxley Pcl LOXL.BK, which fell sharply after they told the stock exchange they would not join in the bidding for the third-generation licences.

The two stocks surged earlier this month as investors speculated they would join the 3G bidding.

At 0412 GMT, Jasmine shares were down 15.4 percent at 1.21 baht, having hit 1.07 baht, a three-week low, while Loxley shares were down 8.22 percent at 2.68 baht, at one point falling to 2.62 baht, a two-week low. ($1=31.30 Baht) (Reporting by Arada Kultawanich and Viparat Jantraprap; Editing by Alan Raybould)